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Question
Current Ratio 2.4; Current Assets ₹ 96,000; Inventories ₹ 42,000. Calculate the Liquid Ratio.
Numerical
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Solution
Current Ratio = `"Current Assets"/"Current Liabilities"`
2.4 = `(₹ 96,000)/("Current Liabilities")`
Current Liabilities = `(₹ 96,000)/2.4`
= ₹ 40,000
Liquid Ratio = `"Liquid Assets"/"Current Liabilities"`
Liquid Assets = Current Assets − Inventories
= ₹ 96,000 − ₹ 42,000
= ₹ 54,000
Liquid Ratio = `(₹ 54,000)/(₹ 40,000)`
= 1.35 : 1
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